A Buyer Agrees to Purchase "Two Cars" from an Elevator

question 72

Multiple Choice

A buyer agrees to purchase "two cars" from an elevator company.All material terms are contained in a written contract,but "two cars" is not further defined.Which of the following evidence can be admitted if there is a dispute over what "two cars" refers to?

• A) Oral evidence that before the signing of the contract the parties intended the contract to be for the purchase of three cars.
• B) Oral evidence that before the signing of the written agreement the elevator company said it would extend its normal 1-year warranty (which is stated in the written contract) to 2 years.
• C) Oral evidence that the word "car" refers to an elevator,since that is normal in the elevator industry,and that it does not refer to any of the company's automobiles.
• D) Written evidence from prior to the signing of the written contract that the parties intended the contract to be for the purchase of three cars.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by recording profits proportional to their ownership percentage.

Inventory

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in rendering services.

Journal Entry

A record in accounting that notes the debit and credit transactions affecting the financial statements of a business.

Significant Influence

A concept in accounting and finance where an investor has the power to participate in, but not control, the financial and operating policy decisions of an investee.